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College Planning on Long Island
Help pay for your child's or grandchild's college without losing sight of your own retirement.
How Can a Financial Advisor Help Me Plan for College?
Wanting to help your kids or grandkids through college is natural, and so is wondering what it could cost you down the road. A financial advisor can help you figure out how to pay for school with the savings and time you have, and see what each option means for your retirement before you commit.
At Investment Insight Wealth Management, we help Long Island families save and invest for college through options like a 529 plan, a state-sponsored college savings account, as part of their overall financial plan.
College planning on Long Island comes with a local benefit: New York gives 529 account owners a state income tax deduction on their contributions, and grandparents who own an account for a grandchild may qualify too.
Can I Pay for College From the Savings I Already Have?
If you're getting a later start, much of the tuition money may come from accounts you already have, such as a brokerage account or an IRA.
The order you draw from those accounts is important, since selling taxable investments can create capital gains and traditional IRA withdrawals generally count as income. For our investment management clients, we plan those withdrawals as part of the portfolio we manage, along with input from your CPA or tax professional.
We can show you how different ways of dividing your savings could affect your retirement plan before you commit.
Tuition bills can also make it tempting to claim Social Security early, which permanently reduces your monthly benefit. Robert J. Sullivan, ChFC®, is a National Social Security Advisor (NSSA®), and he can walk you through how each claiming age lines up with the years you're paying tuition. He brings more than 30 years of experience to these decisions, and you see the same familiar faces year after year at our Massapequa office.
What Does College Planning Include?
We work through four areas with you, each tied to a decision you face before the first tuition bill.
Choosing an account and a target
You see your options side by side, from 529 plans to Coverdell and custodial accounts, plus a cost estimate and a monthly amount that fits your budget.
Reviewing progress as life changes
As your child grows, we review your savings against your retirement goal together, so there are fewer surprises when tuition is due.
Financial aid guidance
We explain in general terms how your savings choices may affect financial aid. We can't promise any particular aid result.
Coordinating the tax side
Your CPA or tax professional handles the filing, and we work with them on the tax treatment of your savings so 529 benefits and New York's deduction are part of your plan.
College planning is part of how we work with our investment management clients for qualifying households. Full fee details are available on our Investment Management page.
If you'd prefer to start with a plan alone, we also offer financial planning as a standalone engagement, which runs up to 1.5% of annual household income with a $3,750 minimum; details are found on our Financial Planning page.
College Planning FAQs
What is the best way to save for college?
A 529 plan, a state-sponsored college savings account, is often a strong starting point, because earnings aren’t subject to federal income tax when the money goes toward qualified education expenses. Those include tuition, fees, and books, plus room and board for students enrolled at least half-time. 529 investments can lose value, and withdrawals for other purposes generally owe income tax plus a 10% federal penalty on earnings. Coverdell education savings accounts and custodial (UTMA or UGMA) accounts held in your child's name are other options with their own rules and trade-offs. We can walk you through how each one lines up with your timeline and what you’re trying to accomplish. This process is not intended as tax or legal advice; consult a qualified professional regarding your specific situation.
Does a financial advisor help with 529 plans?
Yes, a financial advisor can help you choose a 529 plan and decide how much to contribute based on when your child is likely to start school. An advisor can also show how college saving fits alongside your retirement goals. College planning is part of how we at Investment Insight Wealth Management work with our investment management clients for qualifying households.
Can I use my IRA to pay for college?
Yes, and if you're under 59½, IRA withdrawals for qualified higher-education expenses are generally exempt from the additional 10% early-distribution tax. Regular income tax still applies to the taxable portion. The exception doesn't cover 401(k) withdrawals, and money used for tuition is no longer invested for your retirement. We can run the numbers on each option with you, including the tax side. This is not intended as tax or legal advice; consult a qualified professional regarding your specific situation.
Should I save for college or retirement first?
For many families, retirement savings come first, since loans and financial aid may help pay for college, while retirement depends largely on your own savings. You can still make progress on both by dividing your savings in a way that fits your income. We can model a few different splits so you can see what each one does to your retirement before you commit to anything.
How does a 529 plan affect financial aid?
A 529 plan owned by a parent is reported as a parent asset on the FAFSA, the federal financial aid application, and how much it affects aid depends on the rest of your family's finances. Some colleges also use their own aid forms with different rules. We can explain in general terms how your savings choices may affect aid, though we can't promise any particular outcome.
What happens to 529 money if my child doesn't go to college?
You can switch the beneficiary, meaning the person the account is for, to another family member such as a sibling, generally without owing federal income tax. A limited rollover into the beneficiary's Roth IRA is also allowed under certain conditions. Money withdrawn for other purposes usually means income tax on the earnings and possibly an additional federal tax. The Investment Insight Wealth Management team can help you weigh these options with your CPA or tax professional. This is not intended as tax or legal advice; consult a qualified professional regarding your specific situation.
Does New York offer a tax deduction for 529 contributions?
Yes, if you own an account in New York's 529 College Savings Program, you can deduct your contributions from your New York taxable income, up to an annual limit. The deduction applies only to New York's own program. If you later withdraw money for a purpose New York doesn't treat as qualified (such as K-12 tuition or a move to another state's plan), you may have to add the deducted amounts back to your income. This is not intended as tax or legal advice; consult a qualified professional regarding your specific situation.
Start Your Family's College Plan
Whether college is two years away or twelve, a conversation is a good place to begin.
Tell us who you're saving for and when they're likely to start school, and we can meet at our Massapequa office or virtually to map out a plan that accounts for your retirement, too.
Phone: (516) 249-0060
Email: hello@myinvestmentinsight.com
Every situation is different. This is general information, not personalized advice. Results depend on individual circumstances. Investing involves risk, including possible loss of principal. Not intended as tax or legal advice; consult a qualified professional regarding your specific situation.
